An investigation into impact of credit on growth of MSEs in Banana Hill, Kiambu district

Abstract

Many MSE owners and prospective entrepreneurs ,in Banana Hill continue to borrow funds to finance or start-up enterprises in Banana area but despite all this effort. many of them are low-growth. low return enterprises and consequently there is failure and stagnation of entrepreneurship in this area.

Therefore. the primary objective of this research was to investigate the impact of credit on the growth of micro and small enterprises (MSEs) in Banana Hill area. The study addressed the following research questions: • What uses were the loans put into? • What was the effect of loans on immediate incomes from the business? • What was the effect of long term loans on long-term capacity to earn higher income? • What was the effect of loans on employment

The literature review is in nine parts. It gives a global and national outlook of entrepreneurship. It stresses the importance of credit and the major source of credit for MSEs and their constraint of credit to this sector. It also looks at some of the growth factors and effect of credit on business growth and its measurement. To accomplish the task of investigating the impact or credit in Banana Hill area, the researcher sampled fifty MSEs from a population of live hundred MSEs in the area using stratified sampling, using questionnaires, interview guides and observation methods. The researcher compiled data which was then analyzed using descriptive statistics. The research study found that many enterprises m Banana Hill are micro employing one to five workers. The owners borrowed loans to start or expand their businesses.

The majority used their loans properly tor the intended purposes. However a few of them diverted the loans for their own personal uses. Most of the funds were sourced from the local NGOs (Jamii Bora. Banana Hill Matatu Sacco and SMEP) but there is a need to establish other sources of credit and finance for MSEs in this area since most of the loan beneficiaries had businesses before loan applications implying that they had financed their businesses from other sources.